In a major speech to a business audience at the North Harbour Club in Auckland today, Mr Key said Labour's plan to build 100,000 houses over 10 years wouldn't do anything to ease the cost of building.

"It will either fail miserably, deliver dwellings that people don't want to live in, or require massive taxpayer subsidies."

Mr Key said the Government would build 2000 houses over the next two financial years and would work with local councils on issues of land supply, building and resource consents through the Resource Management Act and provision of infrastructure.

"We need more houses built in New Zealand at a lower cost. That means we need more land available for building, more streamlined processes and less costly red tape."

Mr Key said the Government were already a major player in the housing market and were wary of spending more taxpayer money.

"There are plenty of private sector investors who want to invest in housing - if only we can remove the roadblocks that are slowing down the process and driving up costs."

Labour Party leader David Shearer said making changes to the Resource Management Act would change little for the housing problem and did not amount to a solution.

"We've actually got to get out there and build houses - I think the Government is stuck on housing - they don't know what to do."

Mr Shearer said Labour would definitely build 100,000 houses over a decade and was unapologetic about the policy.

"There are too many first home buyers who simply cannot afford to get into their own homes.

"National are stuck in the past thinking the market is the answer - those days are over - we need to roll up our sleeves and get stuck in," said Mr Shearer.

The Green Party announced plans this week to launch a rent to own housing scheme called the progressive home ownership model.

The plan was announced days after a report showing Auckland had among the most unaffordable housing in the world. The median price had reached $500,000 in the past few months.

Under the Greens' rent-to-buy model the Crown would build around 10,000 houses which low-income families with dependent children would live in and eventually own if they chose to.

The Crown would initially own all equity in the house because the eligible families with dependent children would not need to pay a deposit.

Families would make weekly payments, similar to rent, to cover the Crown's investment cost - $200 a week on a $300,000 house at a government bond rate of 3.5 per cent. They would make additional weekly payments to buy equity in the property until it is owned outright.

The payments would be about $100 a week, but that figure would be flexible if circumstances changes.

Greens co-leader Metiria Turei said the policy would dovetail with Labour's KiwiBuild policy.

In response to the policy Mr Key said said the Greens had announced a version of the board game Monopoly.